That is not good news for people with a poor credit score. However, there are different loan options that are ideal for people with less than perfect credit.
What does your credit score mean?
First of all, we should look at the different credit score ranges. Your credit score is a three-digit number. The higher the number, the better your credit score. If your score is 780 or above, you are very credit worthy. You can apply for the best cards and, if you have sufficient income, get a personal loan from a bank or a mortgage without any problem.
A credit score of 720 is “very good.” You may not be able to get the best rewards credit cards, but you will still have a very high chance of approval for loan applications. You are still in the “good” range with a score above 680, and if your number is above 620, “average,” you should be able to get standard credit cards, though you may have trouble getting larger loans or rewards credit cards.
If your score falls below 620, you may have to look for alternative loans and other forms of credit.
What if I am below 620?
If your credit score falls in the “fair” or “poor” range, which is below 620, you can still get certain loans, and you can take some simple steps to repair your credit score so that it will eventually rise into the 700s.
First of all, you can apply for an online personal loan if you need money quickly. These loans are ideal for people with average, fair or poor credit because the money lender does not look at your credit score. Rather, they will look at your bank account and also at your latest paychecks. This means that as long as you have a job, you can apply for an online personal loan.
The other option is a secured credit card. Secured credit cards work just like regular credit cards. The card company will report regularly to the credit bureaus that are responsible for making your credit score. This means that if you pay the card’s balance off on time, you will eventually see your credit score rise. The one difference between a secured card and a regular card is that you have to make a security deposit for a secured card. This money will be used as insurance in case you are not able to pay off your credit card balance.
When your credit score rises to the “good” range, you can apply for a regular credit card. This card might not offer rewards, but it is a step above a secured credit card.
You may also be able to apply for personal loans from a bank if your credit score rises above 680. Even then, online personal loans might be a better option. Banks may require you to borrow a larger amount, and the application process might take days or weeks. The online personal loan application process, however, can usually be completed in a few hours and the minimum amount that you can borrow is very low.